Patent Law Update

The Directorate General of Intellectual Property has prepared a draft ministerial regulation to allow companies requesting a delay in the implementation of the contentious Article 20 of the Patent Law. That was the key update from a meeting of AmCham Indonesia and the US-ASEAN Business Council (USABC) with the newly named Director General for Intellectual Property, Freddy Harris, on January 31.

Article 20 mandates that a patent holder shall manufacture the product or use the process in Indonesia. The article also mandates that such a process should support the transfer of technology, the absorption of investment and/or the provision of employment. This has been flagged up as a potential trade barrier and a major issue for investors and AmCham Indonesia has been engaged in talks with the Ministry of Law and Human Rights for over two years to advocate on the issue.

During the meeting, Freddy said that the ministerial regulation would allow patent holders to go online to request a delay of the local manufacturing requirement for five years, which could be renewed indefinitely. The patent holder should provide a reason for the delay in the application, but it is not mandatory for the patent holder to offer extensive evidence or an economic rationale for the delay.

Freddy said the ministerial regulation is designed to provide a legal basis to avoid possible criminal charges being brought against a company that cannot comply with the requirement. A judicial review had been discussed as a solution to the issue, but it is not a viable option because the ministry said it does not have the legal standing to file such a request to the court over an issue that does not directly violate the constitutional rights of Indonesian citizens.

When asked on the next step, Freddy said that the plan for the Directorate General of Intellectual Property is to propose a revision of the Patent Law after the 2019 Presidential Election, as it believes it will be challenging to propose such a revision this year due to the political dynamics in the build up to the 2019 election.

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